Oklahoma lawmakers could loosen, remove health insurance mandates

(Editor’s note: This story was authored by Trevor Brown of Oklahoma Watch and appears here in accordance with the non-profit journalism organization’s republishing terms.)

The fate of health coverage for thousands of Oklahomans continues to hang in the balance despite the failure of Republicans to repeal and replace the Affordable Care Act.

GOP leaders pulled their health-care proposal Friday after it was clear there were not enough votes in the Republican-controlled House to pass the bill. That means, as Speaker Paul Ryan put it, Obamacare will be the “law of the land” for the foreseeable future.

Even though the federal law will remain intact for the time being, state policymakers are exploring moves that could affect health care for hundreds of thousands of people across Oklahoma, by loosening what types of coverage insurers are required to provide.

Two bills proposed during this year’s legislative session would allow in-state or out-of-state insurers to offer plans without coverage requirements that lawmakers have added over the years. Also, under Obamacare or a proposed replacement, U.S. officials could loosen federally required benefits using administrative rule changes, and the state could request a waiver of federal mandates.

Proponents say these changes could drive down premiums and encourage competition in a market that includes only one insurer on the federal health-care marketplace: Blue Cross Blue Shield of Oklahoma.

This could result in cheaper health insurance, although at the expense of more robust coverage.

Health-care leaders, however, warn that allowing insurers to provide scaled-back plans would put many Oklahomans at risk of losing coverage for serious health conditions and being buried in medical debt.

“I feel like people would be playing Russian roulette if (insurers) are arbitrarily left to pick what coverages they want to provide,” said Sam Blackstock, Oklahoma Academy of Family Physicians executive vice president. “I don’t think (proponents of relaxing mandates) understand it’s going to cripple the health care system, put us way back, and ultimately it’s going to be to the detriment of the patients.”

Growth in Mandates

Over the past several decades, Oklahoma lawmakers have carved out 28 state-mandated health benefits that insurers must provide for individual, group or health-maintenance-organization plans.

The mandates are both broad and specific, including mental health, emergency services, cancer treatment and screenings, autism therapy and testing for birth defects.

Before passage of the Affordable Care Act in 2010, these provisions defined what insurers had to cover in Oklahoma.

Generally, those federal benefits go far beyond what states require. And a federal rule, which the Trump administration could change, attaches each state’s mandates in place before 2012 to the federally required benefits package.

Taken together, state and federal mandates require almost 60 categories of coverage that affect more than 365,000 Oklahomans.

Push for Change

Some conservatives and insurers say the mandates have contributed significantly to insurance premium increases.

The average premium for a single person on the federal exchange in Oklahoma rose from $277 per month in 2014 to $376 in 2016 before tax credits ($65 and $78 with credits), according to the office of the state health and human services secretary. Deductibles also have risen sharply.

They also argue that allowing insurers to determine what their plans will offer and permitting plans to be sold across state lines will ultimately increase competition.

“As much as the private market can do their job, we want them to do their job,” said Rep. Lewis Moore (R-Edmond). “We want to get premiums down, and it doesn’t do any good to cover stuff if you can’t afford the coverage.”

Moore is sponsoring two bills that would allow insurers to ignore certain state-mandated benefits in some cases.

HB 1712 would allow in-state insurers to offer individual or small-group plans without one or more state-mandated benefits. SB 478 would allow out-of-state insurers to issue health and accident plans in Oklahoma.

HB 1712 passed out of committee but failed to meet last Thursday’s legislative deadline to clear a floor vote in its chamber of origin. That means the proposal is dead, but could be considered again next year.

Meanwhile, SB 478 passed the Senate on a 39-4 vote on Thursday and it will now go before the House for consideration.

Under SB 478, the out-of-state plans would be governed by the other states’ mandates, even if the coverage is less than what’s required in Oklahoma. The bill would also allow in-state providers to offer “comparable” plans to those from out of state that have more flexible standards.

The proposal has failed before in the Legislature, including in 2012 when a bill died in conference committee after passing both the House and Senate. Although five states have passed similar laws, no insurers have crossed state lines.

Possible Easing of Mandates

Regardless of what Congress does with the federal health-care law, coverage mandates could be loosened.

But the U.S. health and human services secretary, now Tom Price, would retain broad authority to determine how those categories are implemented or give states more flexibility in how to apply them.

Republicans could also attempt to pass legislation eliminating the 10 essential benefits.

In 2013, when he was in Congress, Price authored an ACA replacement bill that would have done away with the essential health benefits.

Eliminating them would effectively return the health-care system to pre-ACA standards in which insurers only had to provide each state’s mandated benefits. If HB 1712 or SB 643 passes, insurers could potentially offer plans without having to meet federal or state mandates.

State May Seek Waiver

The mandates could even be relaxed if the Affordable Care Act survives intact.

That’s because starting this year, states may seek a special “innovation waiver” that allows them to ignore certain parts of the law.

Gov. Mary Fallin and legislators have expressed support for seeking a waiver. A state task force published a report earlier this month with recommendations on the type of waiver the state should seek. The group suggested the state should “re-evaluate and reduce the essential health benefits package” required by Obamacare.

The report doesn’t go into specifics, but among its recommendations are retaining preventive and behavioral health services.

Oklahoma Hospital Association Vice President Rick Snyder, who was involved with the task force, said he sees some opportunities to adjust the list slightly.

“I think having certain benefits that are universally covered by health insurance is important,” he said. “But I think there are dangers in having too much flexibility in that.”

Snyder suggested that lawmakers don’t rush into anything.

“There is a lot of uncertainty at the federal level, other than we are certain some things will change. We are just not sure about the which and the what,” he said. “So It doesn’t seem like the best time to legislate a lot changes on the state level.”

Oklahoma Watch is a nonprofit, nonpartisan media organization that produces in-depth and investigative content on public-policy issues facing the state. For more Oklahoma Watch content, go to oklahomawatch.org.